The term “Strike Off” refers to the removal of the Company’s name from the Register of Companies maintained by the Registrar of Companies.
It’s more like a company closure, as the company will cease to exist after being Struck Off and will be unable to execute any operations thereafter.
The method for striking out company name by the ROC or voluntarily by the firm is outlined in Sections 248 to 252 of the Companies Act, 2013 (‘Act’). A company’s name being struck off helps facilitate the closure of a defunct company. It’s the most straightforward approach to wind up a company.
Types of Company Strike off
- Voluntary Strike off
- Strike off by ROC
Voluntary Strike off
When the board of directors decides to dissolve the company, it is known as a Voluntary Strike Off.
Reasons for Voluntary Strike off
- Difficulties: – Every company is founded with the intention of continuing to operate forever, yet not every firm succeeds in the long run.
- Unprofitability: – if a company isn’t producing enough money to be worthwhile and can’t develop efficiently, filing for a company strike-off may be a viable choice.
- Conflicts between directors: – Conflicts between directors and shareholders are a typical occurrence. If they cannot be resolved, the only alternative may be to close the company.
- Failure to get off the ground: – Sometimes a business does not acquire the necessary backing or does not get off the ground in the manner that its founders had planned. Dissolution may be the only option, or it may happen sooner rather than later.
Conditions for Voluntary Strike off
A company can apply for voluntary striking off if it satisfies the following conditions: –
- Eliminating all of the company’s liabilities
- Obtaining Members’ consent through a special resolution
- The company has not changed its name or relocated its registered office from one state to another in the last three months.
- For three months, the company has not participated in any other activity except that which is required or expedient for the purposes of filing an application under that section, considering whether to do so, closing the company’s affairs, or complying with any legislative obligation.
Strike off by ROC
ROC can strike off a company on any of the following conditions
- A company has failed to begin operations within one year of its incorporation
- A company has not carried on any business or operation for the two most recent financial years and has not applied for dormant company status during that time
- The subscribers to the memorandum have not paid the subscription that they had agreed to pay at the time of the company’s incorporation and a declaration to that effect has not been filed within 180 days of its incorporation
- The company is not doing any business or activity, as shown by physical verification when the Registrar of Companies uncovers the firm’s registered office.
Procedure for strike off
- Any Director of the company would call a board meeting
- Notification of a Board Meeting At least seven (7) days’ notice is required, along with a full agenda.
- Organize a Board Meeting and approve on a Board Resolution
- Annual General Meetings / Extra-Ordinary General Meetings, as the case may be, are sent out.
- Call for a general meeting and the adoption of a special resolution.
- MGT-14 and all appropriate attachments are filed.
- STK-2 and all relevant documentation must be filed.
After determining that all attachments are in order and all requirements are met, and that it is reasonable and equitable to strike off the company, the Registrar of Companies will strike it off after issuing a public